Amazon.com, Inc. (NASDAQ:AMZN) will report earnings for the third quarter of the year after the market closes on Thursday. The company’s share price has grown by more than 30% so far this year, and there’s a huge amount of growth priced into the stock. Heading into earnings some analysts are not that optimistic about further growth in the firm’s stock price.
A new report from Wedbush analysts Michael Pachter, Nick McKay and Nick Citrin rates Amazon.com, Inc. (NASDAQ:AMZN) at Neutral, and puts a price target of $330 on the company’s stock. The analysts reckon that Amazon.com is looking at better-than-expected revenue for the three month period. Problems lie in the company’s EPS, which is difficult to predict.
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Amazon.com earnings expectations
Amazon.com, Inc. (NASDAQ:AMZN) sees the tech market as one still in its infancy. In that vein the company seeks to invest as much money as it can in as many projects as it can to see what works. The company’s earnings per share has suffered because of its investments, but the market is still pricing the company for growth.
According to the Wedbush analysis Amazon.com, Inc. (NASDAQ:AMZN) earnings remain highly unpredictable and that caps the growth capacity of the company’s shares. The analysts have little desire to give a strategy road map to investors, and the resulting risk factor means that the firm’s shares have little upside at their current price.
Many would disagree with the analysis and yesterday’s move in Netflix Inc (NASDAQ:NFLX) shares shows that the market is willing to raise shares to incredible highs if the right metrics come in above expectations. Amazon.com earnings may be unpredictable, but if they come in above expectations there may be upside to the shares.
Amazon.com Inc. valuation
The philosophy of earnings suppression at Amazon.com, Inc. (NASDAQ:AMZN) makes it a very difficult company to value. The market, and the Wedbush analysts, are pricing in a huge amount of growth. The Wedbush price target of $330 represents fifty times expected 2019 earnings.
Amazon.com, Inc. (NASDAQ:AMZN) will let the market know how it did in the third quarter on Thursday afternoon. When the actual numbers are released, the market will finally be able to see whether there is upside in the shares.